Tue Dec 2, 2014 5:32am EST
* E.ON to focus less on acquisitions -CEO
* Says both companies will be attractive to investors
* Shares down 1.1 percent (Adds details on grid business)
BERLIN, Dec 2 (Reuters) - German utility E.ON plans to put priority on natural growth rather than acquisitions once it has spun off its power plants, energy trading and upstream businesses in 2016, Chief Executive Johannes Teyssen said on Tuesday.
The spin-off announced this week will leave E.ON with a portfolio of power distribution grids and renewable energy businesses as well as end-customer services such as energy efficiency, ridding it of its loss-making coal and gas plants that have suffered from a rise in renewables.
"E.ON will grow more through organic growth and less via acquisitions," Teyssen told a group of foreign journalists in Berlin on Tuesday.
He also sought to assuage concerns about the new company, which has been labelled by some analysts as a "bad utility" - a comparison to similar developments in the banking industry.
"Both companies will have global ambitions," he added, saying he was convinced that both entities would be highly attractive for investors.
Shares in the group retreated 1.4 percent in mid-morning trade, having gained more than 4 percent on Monday.
E.ON's future set-up will be mostly based on power and gas distribution grids, which yield mid- to high-single digit returns usually set by country regulators, making them stable cash machines.
This has made them a favourite target of infrastructure investors on the lookout for stable returns amid record-low interest rates.
Across Europe, E.ON relies on more than 1 million kilometres of networks, most of it located in its home market Germany, and supplies 26 million grid customers. (Reporting by Reinhard Becker and Christoph Steitz; Writing by Madeline Chambers; Editing by Peter Graff)
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